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Washington: real estate, realtor, agent, commission, mortgage.

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Old 03-22-2008, 02:37 AM
 
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So, being an utter newbie regarding purchasing property in the US, particularly in Washington State where we are re-locating to from half-way round the world, I was wondering if veterans could share some knowledge of "how things are done" when purchasing real estate.

- how close to the asking price are sellers expecting? Do you offer below it, above it?
- are fixed listings the norm, or are there other forms of sale such as tender, auction, etc.?
- do people do private sales?
- what is the commission an agent gets? Is it standard across the industry or can the rate be varied/negotiated? At what point do they get it?
- what sort of additional fees would you expect?
- is there a standard sale and purchase agreement, or do you need to engage an attorney?
- what kinds of conditions are used when making an offer? eg, subject to finance, subject to building report, etc.?
- what things do people use in negotiations - incentives, flexibility of terms, etc.?
- what is an average length between the deal and moving in? One month? Three?
- are there specialists/middlemen who you would engage as a seller or purchaser to look after your interests?
- what kinds of guarantees, warranties would you expect?
- what sort of inspections are standard?
- how do you check building and other restrictions on a property? Are there council property files, land information memorandums, city plans, etc. that should be consulted?
- are valuations used?
- what are the financial options available - is it better to go directly to banks, shop around, or go to a broker?
- are there any tools or websites that people use to evaluate the value of a property, find out previous sale prices, etc.

Any thing else along these lines would be much appreciated. I know this isn't exciting stuff for most people, but its the kind of information that everyone needs sooner rather than later.

Last edited by Chenebe; 03-22-2008 at 02:47 AM..
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Old 03-22-2008, 03:04 AM
 
Location: Cosmic Consciousness
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Hi again.
Y'know, over time we can answer your questions. But the wisest course that we constantly recommend on C-D -- especially for people who have never lived in the U.S. before -- is to rent an apartment or condo or house for at least your first 6 months. That's really the only way to gain any knowledge about where you'd like to live, and what the commute to work would be like. And you certainly would not want to make such a huge purchase, which has so many critical legal and financial consequences, knowing nothing about this nation's or this state's rules, regulations, and cultural ramifications, right?

You might already be aware, from the news, of an additional current consideration. The U.S. real estate market is currently in a downslide. The economy of Washington is quite healthy so the slide is not so great here as in some other areas of the U.S. But here, real estate prices definitely have dropped somewhat in the past 6 months, and all forecasts are that they will continue to slide somewhat for perhaps a year, maybe longer. That would mean it's not a smart idea to buy right now -- especially in a market you do not know, in a banking/mortgage/financial world in which you as yet have no experience.

Worth considering?
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Old 03-22-2008, 03:31 AM
 
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Well, we are planning on renting a bit, with view towards purchasing in the future for the reasons you mentioned, and especially since we love our NZ house and won't want to sell it until we are certain Washinton State is for us. But it is never too soon to know what is involved in buying a property - it took me two years of looking for our current house to perfect my knowledge of how to go about it in the most educated way possible. You learn little bits of useful knowledge as you go. So, I wouldn't put off asking questions about buying till I was renting - I want to know now. It will mean I can make a fast decision (if the circumstances arose) if I had to, rather than being afraid because I did not know enough.

With regard to the current US real estate climate, when you already have a house, it would normally not have much of an impact whether a market was booming or in a downturn if you were buying and selling in the same market. But because we would be selling in one market and buying in another, we'd have to be as careful as we possibly can be, and possibly err on the conservative side. It is tricky enough trying to predict a market, not to mention two. Not to mention the added complication of currency exchange rates. It would work really well if at the time, we sold in a booming market and bought in a low market, but realistically it could just as easily be the opposite, which would spell financial disaster.
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Old 03-22-2008, 03:33 AM
 
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PS. Maybe someone could recommend a book on the more technical and legal aspects of real estate purchase?
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Old 03-22-2008, 04:00 AM
 
Location: Cosmic Consciousness
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Quote:
Originally Posted by Chenebe View Post
we'd have to be as careful as we possibly can be, and possibly err on the conservative side.
Exactly my point. We agree. Major purchases, especially ones with complex legal consequences, must be made "on the conservative side" unless one is outrageously wealthy. And the real estate market here, for some forseeable time, is not at a price level one would prefer to buy into as prices are currently quite inflated, many people think. If you are not aware of the madness that has been going on with U.S. real estate in the past 3 or 4 years, you can't imagine the mess the market is in right now. Most people feel that almost any currrent price is too high, or much too high, or ridiculously high. Meaning that for anyone immigrating to this country, now is a time to rent, save your money, and learn.

In your original post on this particular thread, you have requested so much information that a seminar might be required to respond. Purchasing real estate is a highly regulated activity in the U.S. AND you left to the end of your list the first and most important aspect of purchasing real estate: Unless you are wealthy and can purchase a home outright (pay all cash), your purchase must be financed by someone: someone has to lend you the money to make the purchase. And the rules are getting stricter (due to the recent madness in the market) for lending institutions to lend money.

The purchaser and the lending institution must select each other; there are lots of choices of lending institutions (most mortgage brokers work at banks, but there are also independent mortgage brokers). The lending institution you wish to work with must approve you (called "qualify you" here), meaning they agree to lend you x amount of money if your financial situation, which it investigated in depth and approved, does not drastically change by the time you choose a house to buy. So unless you can pay US$250,000 to US$500,000 or more cash, there is no house search until you have been "qualified" and know exactly how much the lender will lend to you and therefore how much house price you can pay.

That's a start. I hope it's interesting.

Last edited by allforcats; 03-22-2008 at 05:18 AM..
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Old 03-22-2008, 04:04 AM
 
Location: Cosmic Consciousness
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Quote:
Originally Posted by Chenebe View Post
PS. Maybe someone could recommend a book on the more technical and legal aspects of real estate purchase?
The C-D contributor Ira500 can help you. He's a real estate agent (and I think maybe a mensch!!). I used to be a real estate agent, but in another state, not in Washington, and the laws vary from state to state. Ira500, where are you??
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Old 03-22-2008, 10:09 AM
 
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I'm here! And thanks, Allforcats, for calling me a mensch..I agree with Allforcats that renting is something you should do at first, and when/if if you decide to buy: take your time looking and don't feel rushed.
But in answer to your questions:
1. The market in the Seattle area has slowed down some and the slowdown seems to be continuing, but certain areas within the Seattle are still selling strongly, and that's part of what determines how close to asking price the actual price is...Within Seattle, Ballard,Wallingford, Phinney,Greenlake, Queen Anne, etc are still doing well, and the most desired type of home seems to be older( 1920's-1930's) and charming in good shape..These usually sell for very close to the asking price, within 2%( there are exceptions such as if the place was priced too high to begin with)...Other parts of the Seattle area I'd say 5% under is closer to the norm, and some places just aren't selling, so they have lowered their asking prices considerably..I've seen drops of 15%.
2. Fixed listings are the norm, but there are alternative sources, For Sales By Owners, auctions, Ebay..
3. The standard commission rate is 3% to the listing agent and 3% to the buyer's agent, completely paid by the seller. If you are a buyer you won't know what the seller is paying his own listing agent, but there are discount brokers like Redfin and AAA Properties in Bellevue who charge less to be a listing agent, and they also rebate some of the buyers agent commission to the buyer if they act as the buyer's agent. Some other agents who are working for traditional brokerages also show flexibility on commission...it is supposedly a negotiable item. But a lot of agents, myself included, list for less than the standard and rebate some of our commissions back to the buyer.
4. Lots of additional fees. For the buyer, it's escrow, title, and fees associated with getting a loan, and a lot of those fees are small but they add up and are seemingly unnecessary, just a way for the lender to get some additional $$. Typically, costs to the buyer tend to run about 2% of the purchase price ( that varies a lot with the lender)
5. There is a standard purchase and sale agreement; no attorney is necessary unless you are purchasing a home without an agent..then it's not a requirement but it would be a strong benefit.
6. Contingencies are common and include home inspection contingency, financing contingency
7. Incentives: In the current market it is becoming more common for the buyer to ask for the seller to pay for some of the buyer's closing costs. I've also seen in some places where the seller is offering a 42 inch flat screen TV.
8.Guarantees or warranties: Not usually. A buyer will want and pay for a good home inspection after the purchase and sale agreement has been signed by both parties. The inspection contingency allows the buyer to show the seller what the inspector found, and ask for those things to be repaired or for a reduction in price. Some listing agents will buy the new buyer a one year home warranty.
9. Valuations- An appraisal is required by the lender and for lender, telling them whether they should loan you the amount you are requesting. Should they find that the home is not worth what you've agreed to pay, they will loan less money, and is also the basis then to ask for a reduction in the selling price...There are some free online valuation sites. Zillow.com and cyberhomes.com . They are both lacking, I think. They'll give you a very approximate figure...A good real estate agent will also happily to a market analysis for you looking at comparable sales and comparable properties currently for sale to also give you an approximate figure(you'll get an idea from that if the home is way overpriced or more reasonable), but the actual appraisal is going to be the most accurate.
10. Loans? Everybody has an opinion. I have a few mortgage brokers I refer people to instead of banks since they have more to choose from in trying to match you up to a good loan, but there are also unscrupulous mortgage brokers...Credit Unions are also a good source.
Feel free to ask any other questions that come up. The current Seattle area market...Prices are still pretty high, though they've starting dropping, but rents are still far lower than mortgage payments.
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Old 03-22-2008, 12:30 PM
 
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One thing I forgot- The inspection contingency allows the buyer to walk away from the deal without any sacrifice of money ( except for what they've already spent on the inspection)..
My wife and I did that on a home in West Seattle 10 years ago...the inspection came out with so many problems ( plumbing, electric, foundation) that we felt that even if we could get the seller to agree on a lower price we still didn't want to deal with such a major fixer, so we just said no.
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Old 03-22-2008, 02:01 PM
 
Location: Cosmic Consciousness
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Ohboy ohboy aren't we fortunate that you are here, Ira500!!! And don't menschion it.
Chenebe, I do hope you now have a "sense" of how the art of purchasing real estate unfolds here.

Last edited by allforcats; 03-22-2008 at 02:25 PM..
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Old 03-22-2008, 02:17 PM
 
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Thanks so much for all that Ira, it was very helpful. Mensch for sure Having those questions answered makes the process clearer in my mind. It's great to meet a real estate agent who is willing to share information rather than let the buyers and sellers deal in ignorance. I think customers who are informed make faster decisions anyway because they know exactly what they are doing! Some types of customers anyway ...

I'm sure there are lots of other aspects I have not thought of.

One question out of left field that just struck me right now - how common is it for houses to be put into a family trust over there?
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